In 1935, when Social Security was first introduced, the average lifespan in America for those over 65 was about 13 years. That life expectancy has increased by almost 54%, to almost 20 years, thanks to medical advancements. The difficulty of disbursing more money over longer periods of time has been brought on by these longer life spans. 64 million Americans are expected to receive Social Security benefits in 2021, according to the Social Security Administration (SSA).
In response, the SSA encouraged people to delay retirement by offering maximum monthly benefit amounts. A retiree who is 62 years old in 2021 is eligible to receive a maximum monthly benefit of $2,324. An American who waits until age 70 to retire, however, is eligible to receive the maximum monthly benefit of $3,895.
However, did you know that the average monthly payment can differ significantly depending on the state in which you decide to retire and the cost of living there? 15 states are ranked according to the amount of Social Security benefits they receive. Some people might be on the move…
Average annual benefit: $18,024
896,146 retirees in Wisconsin received average monthly benefits of $1,502.04. Social Security is not subject to state taxes. Wisconsin has no estate or inheritance taxes and is regarded as being moderately retirement-friendly.
However, property taxes are extremely high, and retirement income is taxed. The state’s top marginal tax rate is 5.9%. Based on taxable income, state income taxes range from 3.86% to 7.65%.
Average annual benefit: $18,084
1,078,144 retirees in the Old Dominion State received average monthly benefits of $1,507.01. Retirement income is exempt from taxes in Virginia up to $12,000, making it a tax-friendly state for retirees.
The state imposes a sales tax of 5.3%, with additional local taxes in some places. A 2.5% statewide tax is applied to groceries. Both inheritance and estate taxes are exempt. Based on taxable income, state income taxes range from 2% to 5.75%.
Average annual benefit: $18,104
878 840 retirees in The Bay State received average monthly benefits of $1,508.65. The state does not tax benefits, but because retirement income is fully taxed without any exceptions or deductions, it is moderately retirement-friendly.
Most footwear and clothing priced under $175 are exempt from sales taxes, which are 6.25%. Both local sales taxes and inheritance taxes do not exist. The state’s flat income tax rate is 5%. Some seniors receive credit relief from property taxes.
Average annual benefit: $18,145
391,286 retirees in the Sunflower State received average monthly benefits of $1,512.09. The state of Kansas taxes Social Security benefits. The state offers some income tax exemptions for seniors, making it moderately retirement-friendly.
Did you know that the owner of a Social Security number also dies? The number is never again issued. If a person receives a new number, this holds true for both numbers as well. To guarantee that the person receives credit for all earnings, the two are linked.
Average annual benefit: $18,174
2,548,783 retirees in The Empire State received average monthly benefits of $1,514.50. There is no tax on benefits. Interestingly, the first Social Security number was issued to John Sweeney Jr. of New Rochelle in 1936.
Over 40,000 people misused Hilda Whitcher’s number over the course of four decades. By using display cards with Whitcher’s Social Security Number without her consent, her employer in 1936 increased wallet sales. Although the Administration gave her a new number in 1943, the number was still being used improperly in 1977.
Average annual benefit: $18,185
1,966,422 retirees in Pennsylvania received average monthly benefits of $1,515.44. Retirement income for seniors 60 years of age and older is not taxed in Pennsylvania. The state is regarded as accommodating to retirees.
The 6% sales tax does not apply to food, fuel for heating, prescription drugs, or clothing. Local governments may impose additional taxes on top of the state’s flat 3.07% income tax rate. There is no estate tax, only a value-based inheritance tax.
Average annual benefit: $18,257
761,515 retirees in the North Star State received average monthly benefits of $1,521.45. One of the 13 states that tax Social Security benefits is Minnesota. The state is not thought to be retirement-friendly due to higher taxes.
Did you know that by closely monitoring their credit card statements, retirees can help prevent identity theft? When charges are made on your cards, notification systems can send you emails or text messages alerting you to the transaction.
Average annual benefit: $18,266
Social Security benefits are not subject to tax in Indiana. For retirees, Indiana is a moderately tax-friendly state because they are allowed to deduct some of their property taxes.
Groceries are typically exempt from the 7% state sales tax. While Indiana has a 3.23% flat tax, some counties also impose additional taxes of up to an additional 3.38%. There aren’t any inheritance or estate taxes.
Average annual benefit: $18,432
970,010 retirees in The Evergreen State received average monthly benefits of $1,535.96. Because there is no state income tax in Washington, benefits are not taxed. However, some taxes are regarded as high.
Municipalities have the option to increase the state sales tax from 6.5% to 9.21%. Seniors may be eligible for exemptions from property taxes. State and inheritance taxes do not exist. Overall, retirees may consider Washington to be tax-friendly.
Average annual benefit: $18,586
720,910 retirees in The Old Line State received average monthly benefits of $1,548.15. These benefits are not subject to tax in Maryland, but Kiplinger warns that IRA distributions are subject to full taxation. There is no local sales tax and a 6% state tax.
Did you know that Baltimore, rather than Washington, D.C., serves as the location of the Social Security Administration? It wasn’t for lack of trying. In 1935 and again in 1941, two distinct SSA-intended buildings were redistributed to other government agencies.
Average annual benefit: $18,614
1,498,279 retirees in The Great Lakes State received average monthly benefits of $1,551.19 each. Social Security is not taxable in Michigan. Their flat state income tax is 4.25%, and their sales tax is 6%.
Homestead credits are offered to homeowners even though property taxes are thought to be high. With the ability to deduct a portion of retirement income from taxes, Michigan is regarded as being tax-friendly for retirees.
Average annual benefit: $18,794
In The Granite State, 213,708 retirees received average monthly benefits of $1,566.21. Pensions and retirement account benefits are not subject to taxation.
Furthermore, there are no inheritance, sales, or estate taxes. It’s interesting to note that the lowest Social Security number was created in Concord, the state capital of New Hampshire. In 1936, Grace Owen was assigned the number 001-01-0001.
Average annual benefit: $19,009
156,16 retirees in The First State received average monthly benefits of $1,584.12. Social Security is not taxable in Delaware. Income from pensions or retirement accounts, both of which are taxable, may be written off.
With no state sales tax, no death tax, and very low property taxes, Kiplinger names Delaware as the “most tax-friendly” state. For some seniors, a school property tax credit is also available. There aren’t any inheritance or estate taxes.
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Average annual benefit: $19,343
501,724 retirees in The Constitution State received monthly benefits totaling an average of $1,611.84. Social Security benefits are subject to taxation in Connecticut. The state’s sales tax rate is 6.35%, and groceries are exempt.
For some more expensive items, like jewelry with a price tag over $5,000 or taxes on longer-term car rentals, the sales tax may be higher. Property taxes in the state are high, but seniors might be eligible for a credit.
Average annual benefit: $19,402
The Social Security Administration reports that retired workers receive the highest average payouts in New Jersey. 1,181,229 retirees in the Garden State received average monthly benefits of $1,616.80.
There is no tax on Social Security. Although most of the state is subject to a 6.6% sales tax, most clothing and footwear are exempt. Since New Jersey has the highest property taxes in the nation, it is only moderately suited for retirees.